On Oct. 28, 2014, the First District Court of Appeal (Division 2) issued an opinion in Godfrey v. Oakland Port Servs. Corp. , __ Cal.App.4th __; 2014 Cal. App. LEXIS 980 (2014), upholding a $964,557.08 class-wide meal and rest period judgment secured on behalf of truck drivers who performed work out of employer AB Trucking’s Oakland facility. In addition to concluding that California meal and rest break requirements are not barred by FAAAA preemption [Slip Opinion, at 9-17], which mirrors the holding of the Ninth Circuit in Dilts v. Penske Logistics, LLC, ___ F.3d___ (9th Cir. Sept. 8, 2014), the Court upheld the trial court’s finding of “absolute” meal and rest period liability based on the employer’s failure to maintain a meal/rest period policy, and practice of providing drivers meal and rest breaks while waiting in line to enter or exit the Port in their trucks.

With regard to the latter issue, the employer’s challenge turned on the trial court’s finding that no class-member had received a legally complaint meal or rest break. The employer claimed this was error, and that “the [trial] court should have reserved individual determinations of damages for a claims administration process rather than granting ‘a maximum damage award to each and every member of the plaintiff class, based upon an assumption that all of them had the same experience as the handful of drivers who testified on plaintiffs' behalf at trial ….’” SeeSlip Opinion, at 18-19. The Court rejected this contention outright, concluding that the evidence cited in the trial court’s Statement of Decision established the employer had categorically failed to satisfy its threshold meal/rest break obligations in the first instance on multiple, independent grounds. Id., at 19-22.

First, the trial court concluded that the employer’s failure to communicate a meal and rest period policy to employees violated the employer’s legal obligation to authorize breaks in the first instance. See Slip Opinion, at 20 (“[T]he evidence shows AB neither maintained, nor provided drivers, any 'formal' meal period policy. The first example of unlawful discouragement provided in Brinker presumes the existence of a formal meal period policy. AB does not meet the ‘provide’ standard because it provided no evidence showing drivers were, at a minimum, informed in any meaningful or consistent way that they could take a meal period, or the definition of any such meal period.”); Id., at 21 (“AB provided no evidence of any formal policy on rest breaks” and “[a]s with meal periods, there is no indication drivers were, at a minimum, informed in any meaningful or consistent way that they could take rest breaks, or the definition of any such rest breaks.’”).

Second, the trial court concluded that the employer’s practice of providing drivers breaks during “waiting time” while in line at the Port – which by definition was not a duty-free break –violated the employer’s obligation to release employees of duty:

The evidence reflects AB knew drivers were stuck in line to enter the Port, once inside the Port, and in order to exit the Port, every single day. Yet it did not provide for the relief of its employees' duties during this 'waiting' time. Waiting, even in a comfortable location, is 'on-duty' by definition: here, drivers were waiting to complete a task assigned by their employer.

See Slip Opinion, at 21.

The Court of Appeal held that these findings rendered the employer’s criticism regarding the scope of damages without merit:

AB's contention that the SOD did not apply to "all" class members and that it did not say that deprivation of meal and rest breaks happened "most of the time" is not well taken. A fair reading of the court's factual findings shows that with respect to the class as a whole, the court determined that AB had no policy of providing rest and meal breaks, that breaks the drivers were able to take were usually on-duty breaks, and that AB consistently discouraged or prevented the taking of off-duty breaks. The court's finding of liability applied to the class as a whole, and to its members individually.

See Slip Opinion, at 20.

Moreover, the Court of Appeal rejected the employer’s claim that these findings were inconsistent with “generalized” employee-testimony claiming that they always received meal and rest breaks. See id., at 21, fn. 21 (“Francis stated that he ‘always’ took his lunch break, but we find no testimony that these were off-duty breaks, in conformance with IWC Order No. 9-2001.… Gaines said that he took rest breaks, but it appears that he counted time in his truck, waiting in line at the Port—time that was not off duty—as break time.”). Such testimony did not conflict with “the [trial] court's finding that AB did not provide for conforming breaks and actively and consistently impeded or discouraged drivers from taking them” and as such, “failed to undermine the damages model upon which the court based its award.” See id., at 22.

Thursday, July 10, 2014

On July 9, 2014, the Ninth Circuit issued its ruling in Dilts v. Penske Logistics, __ F.3d __ (9th Cir. 2014) [2014 U.S. App. LEXIS 12933], concluding that “[t]he FAAAA does not preempt California's meal and rest break laws …, because those state laws are not ‘related to’ … prices, routes, or services.” Slip Opinion, at 24. As explained by the Court, the question was not even a close call, as the Court reasoned that California break laws are merely rules of general applicability which operate no differently than state laws governing speed and weight limits, which obviously, are not preempted due to their tangential adverse impact on prices, routes and serves:

Although we have in the past confronted close cases that have required us to struggle with the "related to" test, and refine our principles of FAAAA preemption, we do not think that this is one of them. In light of the FAAAA preemption principles outlined above, California's meal and rest break laws plainly are not the sorts of laws "related to" prices, routes, or services that Congress intended to preempt. They do not set prices, mandate or prohibit certain routes, or tell motor carriers what services they may or may not provide, either directly or indirectly. They are "broad law[s] applying to hundreds of different industries" with no other "forbidden connection with prices[, routes,] and services." Air Transp. Ass'n, 266 F.3d at 1072. They are normal background rules for almost all employers doing business in the state of California. And while motor carriers may have to take into account the meal and rest break requirements when allocating resources and scheduling routes—just as they must take into account state wage laws, Mendonca, 152 F.3d at 1189, or speed limits and weight restrictions, 49 U.S.C. § 14501(c)(2)—the laws do not "bind" motor carriers to specific prices, routes, or services, Am. Trucking, 660 F.3d at 397. Nor do they "freeze into place" prices, routes, or services or "determin[e] (to a significant degree) the [prices, routes, or] services that motor carriers will provide," Rowe, 552 U.S. at 372.

Tuesday, July 8, 2014

On June 30, 2014, the California Supreme Court issued its opinion in Ayala v. Antelope Valley Newspapers, Inc., __ Cal. 4th __ (2014) [2014 Cal. LEXIS 4649], which reviewed the Second Court of Appeal’s reversal of a trial court order denying class certification (previously discussed here) on behalf of a class of newspaper home delivery carriers alleging that they had been improperly classified as independent contractors. At issue was whether the trial court erred in concluding that a standardized form agreement used by the alleged employer (setting forth the terms and conditions of the services to be rendered) failed to provide a sufficient means of adjudicating the “control” test on a class-wide basis due to variations in how the rights expressed therein were exercised by the defendant. The Supreme Court affirmed the finding of error, holding that “[b]ecause the trial court principally rejected certification based not on differences in Antelope Valley's right to exercise control, but on variations in how that right was exercised, its decision cannot stand.” See Slip Opinion, at 2.

Central to the Court’s ruling was the Court’s finding that “what matters under the common law [Borello test] is not how much control a hirer exercises, but how much control the hirer retains the right to exercise.” See Slip Opinion, at 8. In evaluating whether this issue is amenable to class adjudication, the Court further held that “at the certification stage, the relevant inquiry is not what degree of control Antelope Valley retained over the manner and means of its papers' delivery. It is, instead, a question one step further removed: Is Antelope Valley's right of control over its carriers, whether great or small, sufficiently uniform to permit classwide assessment? That is, is there a common way to show Antelope Valley possessed essentially the same legal right of control with respect to each of its carriers?” See id., at 9-10. “[T]he key question is whether there is evidence a hirer possessed different rights to control with regard to its various hirees, such that individual mini-trials would be required.” See id., at 13.

As explained by the Court, the trial court’s first error was focusing on whether the control that was “exercised” by the defendant was uniform, as opposed to whether the rights of control which were “retained” by the defendant were uniform: “Whether Antelope Valley varied in how it exercised control does not answer whether there were variations in its underlying right to exercise that control that could not be managed by the trial court. Likewise, the scope of Antelope Valley's right to control the work does not in itself determine whether that right is amenable to common proof.” Slip Opinion, at 10. Again, “[t]he relevant question is whether the scope of the right of control, whatever it might be, is susceptible to classwide proof.” See id., at 15. Applying these standards, the Court concluded that “the importance of a form contract [at the certification stage] is not in what it says, but that the degree of control it spells out is uniform across the class. Here, for example, the two form contracts address, similarly for all carriers, the extent of Antelope Valley's control over what is to be delivered, when, and how, as well as Antelope Valley's right to terminate the contract without cause on 30 days' notice.” See id., at 11.

In addition to the forgoing, the trial court also was deemed to have erred by resolving the “merits” question concerning the scope of the right of control as a basis for denying certification. As the Court pointed out, this “merits” foray was not only unnecessary to the certification question that was posed, the trial court, by resolving this question, ironically proved that this merits issue could be resolved on a class-wide basis:

Certification of class claims based on the misclassification of common law employees as independent contractors generally does not depend upon deciding the actual scope of a hirer's right of control over its hirees. The relevant question is whether the scope of the right of control, whatever it might be, is susceptible to classwide proof. Bypassing that question, the trial court instead proceeded to the merits. n5 In so doing, the court made the same mistake others have when deciding whether to certify claims predicated on common law employee status, “focus[ing] too much on the substantive issue of the defendant's right to control its newspaper deliverers, instead of whether that question could be decided using common proof.” (Dalton v. Lee Publications, supra, 270 F.R.D. at p. 564.) Moreover, by purporting to resolve on a classwide basis the scope of Antelope Valley's right to control its carriers, the trial court contradicted its own conclusion, that classwide assessment of Antelope Valley's right to control is infeasible.

Slip Opinion, at 15.

Finally, with regard to the “secondary factors” of the common law Borello test (i.e. whether the contractor is engaged in the same business being contracted out, provides the tools, place of work, etc…), the Court held that a trial court is required to evaluate each factor’s materiality to the case at hand, and then determine (1) if the factor entails individualized inquiry, and (2) if so, whether such individualized inquiry would render adjudication of the element of control unmanageable. Slip Opinion, at 18. Again, as “the extent of the hirer's right to control the work is the foremost consideration in assessing whether a common law employer-employee relationship exists” [id., at 7], this analysis is required to ensure the secondary factors do not unnecessarily drive the litigation. With regard to this component, the trial court was deemed to have engaged in this very type of error by “simply recit[ing] secondary factor variations it found without doing the necessary weighing or considering materiality.” See id., at 19.

Wednesday, June 25, 2014

On June 23, 2014, the California Supreme Court issued its opinion in Iskanian v. CLS Transportation, __ Cal. 4th __ (2014) [2014 Cal. LEXIS 4318] which evaluated whether the vestiges of its prior decision in Gentry v. Superior Court, 42 Cal.4th 443 (2007) on the issue of class action waivers survived FAA preemption under the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S. __ (2011). Specifically, the issue turned on the applicability of preemption to wage and hour rights mandated by statute, and “whether a state's refusal to enforce such a waiver on grounds of public policy or unconscionability is preempted by the FAA.” (Slip Opinion, at 1). Not surprisingly, the Court held that Gentry's reasoning did not survive as to an employee’s “private” claims, but did survive as to claims under the PAGA, which belong to the State and are “public” in nature. The Court's analysis as to PAGA was as follows:

First, as explained by the Court, “[t]he civil penalties recovered on behalf of the state under the PAGA are distinct from the statutory damages to which employees may be entitled in their individual capacities.” (Slip Opinion, at 32). In this regard, “[a] PAGA representative action is … a type of qui tam action”, as “a portion of the penalty goes not only to the citizen bringing the suit but to all employees affected by the Labor Code violation.” (See id., at 33). As explained by the Court, “[t]he government entity on whose behalf the plaintiff files suit is always the real party in interest in the suit.” (Id.).

Second, as the ultimate stake-holder in a PAGA suit is always the State, the Court held that an employee cannot waive a PAGA claim by a “private” employment agreement, as such an agreement “is contrary to public policy and unenforceable as a matter of state law”:

As noted, the Legislature's purpose in enacting the PAGA was to augment the limited enforcement capability of the Labor and Workforce Development Agency by empowering employees to enforce the Labor Code as representatives of the Agency. Thus, an agreement by employees to waive their right to bring a PAGA action serves to disable one of the primary mechanisms for enforcing the Labor Code. Because such an agreement has as its "object, … indirectly, to exempt [the employer] from responsibility for [its] own … violation of law," it is against public policy and may not be enforced. (Civ. Code, § 1668.).)

Such an agreement also violates Civil Code section 3513's injunction that "a law established for a public reason cannot be contravened by a private agreement." The PAGA was clearly established for a public reason, and agreements requiring the waiver of PAGA rights would harm the state's interests in enforcing the Labor Code and in receiving the proceeds of civil penalties used to deter violations. Of course, employees are free to choose whether or not to bring PAGA actions when they are aware of Labor Code violations. (See Armendariz, supra, 24 Cal.4th at p. 103, fn. 8 [waivers freely made after a dispute has arisen are not necessarily contrary to public policy].) But it is contrary to public policy for an employment agreement to eliminate this choice altogether by requiring employees to waive the right to bring a PAGA action before any dispute arises.

Slip Opinion, at 35.

Finally, in light of the forgoing, the Court held that “the rule against PAGA waivers does not frustrate the FAA's objectives because … the FAA aims to ensure an efficient forum for the resolution of private disputes, whereas a PAGA action is a dispute between an employer and the state Labor and Workforce Development Agency.” (Slip Opinion, at 36-37). The fact that such a suit is brought by a private citizen “deputized” by the State does not change this fact:

[T]he FAA aims to promote arbitration of claims belonging to the private parties to an arbitration agreement. It does not aim to promote arbitration of claims belonging to a government agency, and that is no less true when such a claim is brought by a statutorily designated proxy for the agency as when the claim is brought by the agency itself. The fundamental character of the claim as a public enforcement action is the same in both instances. We conclude that California's public policy prohibiting waiver of PAGA claims, whose sole purpose is to vindicate the Labor and Workforce Development Agency's interest in enforcing the Labor Code, does not interfere with the FAA's goal of promoting arbitration as a forum for private dispute resolution.

Friday, May 30, 2014

On May 29, 2014, the California Supreme Court issued its opinion in Duran v. United States Bank Nat'l Ass'n., __ Cal.4th ___ (2014) [2014 Cal. LEXIS 3758], concluding that the statistical sampling methodology used by the court to adjudicate employer “liability” was error, and as such, required reversal of the judgment entered in favor of the class. Importantly, the Court did not find that the use of statistical sampling to establish issues of liability was itself improper (it actually held that it may be permitted), but rather, merely held that the sampling model adopted by the trial court in this particular case employed a flawed methodology:

After certifying a class of 260 plaintiffs, the trial court devised a plan to determine the extent of USB's liability to all class members by extrapolating from a random sample. In the first phase of trial, the court heard testimony about the work habits of 21 plaintiffs. USB was not permitted to introduce evidence about the work habits of any plaintiff outside this sample. Nevertheless, based on testimony from the small sample group, the trial court found that the entire class had been misclassified. After the second phase of trial, which focused on testimony from statisticians, the court extrapolated the average amount of overtime reported by the sample group to the class as a whole, resulting in a verdict of approximately $15 million and an average recovery of over $ 57,000 per person.

As even the plaintiffs recognize, this result cannot stand. The judgment must be reversed because the trial court's flawed implementation of sampling prevented USB from showing that some class members were exempt and entitled to no recovery. A trial plan that relies on statistical sampling must be developed with expert input and must afford the defendant an opportunity to impeach the model or otherwise show its liability is reduced. Statistical sampling may provide an appropriate means of proving liability and damages in some wage and hour class actions. However, as outlined below, the trial court's particular approach to sampling here was profoundly flawed.

Slip Opinion, at 1-2.

As summarized by the Court, the overarching issue concerned the “management” of individualized issues in a certified class action. Specifically, the trial court’s inflexible administration of the flawed sampling methodology was deemed to have “ignored” – rather than “managed” – the individualized issues presented by a core element of the employer’s outside sales exemption defense:

This appeal highlights difficult questions about how individual issues can be successfully managed in a complex class action. After reviewing the requirements of the outside salesperson exemption, we discuss the trial court's obligation to consider the manageability of individual issues in certifying a class action. In particular, we hold that a class action trial management plan must permit the litigation of relevant affirmative defenses, even when these defenses turn on individual questions. Next, we explain how the trial court ignored individual issues here, hamstringing USB's ability to defend itself. Finally, we describe the flaws in the trial plan's implementation of statistical sampling as proof of USB's liability to the class.

Slip Opinion, at 18-19.

As explained by the Court, a proposal to establish liability using statistical evidence must be assessed at the certification stage to ensure that individualized issues are “manageable” – an assessment the trial court failed to undertake in this case:

In general, when a trial plan incorporates representative testimony and random sampling, a preliminary assessment should be done to determine the level of variability in the class. (See post, at p. 40.) If the variability is too great, individual issues are more likely to swamp common ones and render the class action unmanageable. No such assessment was done here. With no sensitivity to variability in the class, the court forced the case through trial with a flawed statistical plan that did not manage but instead ignored individual issues.

Slip Opinion, at 28-29.

Rather than assessing the manageability of the individualized issues presented by the outside sales exemption, the trial court used the statistical model to overcome the problematic “individualized” element of the exemption defense, and in so doing, substantively altered the law to permit class-adjudication:

Although the trial court‘s certification decision was apparently influenced by Sav-On, supra, 34 Cal.4th 319, the court overlooked our advisements about the need to manage individual issues in a class action. Although we found substantial evidence of common issues supporting certification in that misclassification case, we also articulated an important caveat: “Unquestionably, . . . defendant is entitled to defend against plaintiffs’ complaint by attempting to demonstrate wide variations in the types of stores and, consequently, in the types of activities and amounts of time per workweek the [class members] in those stores spent on different types of activities.” (Id. at pp. 329-330.) In rigidly adhering to its flawed trial plan and excluding relevant evidence central to the defense, the court here did not manage individual issues. It ignored them.

We have long observed that the class action procedural device may not be used to abridge a party’s substantive rights. “Class actions are provided only as a means to enforce substantive law. Altering the substantive law to accommodate procedure would be to confuse the means with the ends—to sacrifice the goal for the going.” (City of San Jose v. Superior Court, supra, 12 Cal.3d at p. 462.)

Slip Opinion, at 29-30.

As aptly stated by the Court, “Class actions do not create a ‘requirement of common evidence.’ Instead, class litigation may be appropriate if the circumstances of a particular case demonstrate that there is common evidence.” See Slip Opinion, at 33. Thus, for example, a theory which seeks to establish class-wide liability using an employer’s standardized employment policies is an appropriate candidate for certification because “[i]n such a case, the evidence for uniformity among class members would be strong, and common proof would be sufficient to call for the employer to defend its claimed exemption.” See id., at 34-35. In stark contrast, however, the Court makes clear that it would be inappropriate to use statistical sampling to artificially “manufacture predominate common issues where the factual record indicates none exist.” See id., at 26-27. Statistical sampling cannot be used to end-run such defects. As held by the Court, “[s]tatistical methods cannot entirely substitute for common proof” as “[t]here must be some glue that binds class members together apart from statistical evidence.” See id., at 26.

Importantly, the Court rejected the argument that an employer has a due process right to litigate a defense individually as to each and every class member [Slip Opinion, at 35 (“No case, to our knowledge, holds that a defendant has a due process right to litigate an affirmative defense as to each individual class member”)], but it also held that a trial court may not use this fact as a basis to eliminate individualized challenges when statistical methods are used to establish liability. As explained by Justice Liu, “because [statistical] methods are inherently designed to reveal generalized characteristics of a population, they pose the risk that a defendant’s affirmative defenses as to individual employees will not be properly adjudicated.” See Slip Opinion, at 8 (Liu Concurring). As such, “[i]f trial proceeds with a statistical model of proof, a defendant accused of misclassification must be given a chance to impeach that model or otherwise show that its liability is reduced because some plaintiffs were properly classified as exempt.” See id., at 35. Moreover, “[i]f a defense depends upon questions individual to each class member, the statistical model must be designed to accommodate these case-specific deviations.” See id., at 38. However, “[i]f statistical methods are ultimately incompatible with the nature of the plaintiffs’ claims or the defendant‘s defenses, resort to statistical proof may not be appropriate.” See id.

In closing, it is important to highlight that while reversal in this case may be perceived as a defense victory, when viewed at the macro level it actually is not. As the focus of the opinion (and especially Justice Liu’s concurring opinion) was to lay the framework for successfully using statistical modeling to adjudicate liability issues in future cases, the net result of the Court’s opinion actually lays the framework for expanding (as opposed to reducing) the grounds on which future cases may be certified.

On May 16, 2014, 2014, the Fourth District (Division 1) ordered publication of its opinion in Hall v. Rite Aid Corp., __ Cal. App. 4th __ (2014) [2014 Cal. App. LEXIS 426], which concluded the trial court erred by decertifying the plaintiff’s suitable seating claim “based on an assessment of the merits of [the plaintiff’s] theory rather than on whether the theory was amenable to class treatment.” See Slip Opinion, at 2-3. At issue was whether the trial court acted properly by rendering a legal ruling on the plaintiff’s theory of liability – which involved a disputed interpretation of section 14 of the Wage Order – within the confines of a motion for certification.

Specifically, the plaintiff’s theory of liability – which had previously been certified by the trial court – “was that the work performed by Cashier/Clerks when stationed at the check-out registers reasonably permits the use of seats and therefore the failure to provide seats violated section 14 ….” See Slip Opinion, at 4. Rite Aid sought decertification by proffering a completely different interpretation of the Wage Order, which it claimed rendered the liability question individualized. Id., at 6-7 (asserting (1) that “under section 14 [of the Wage Order], the ‘nature of the work’ inquiry requires examination of the job ‘as a whole,’ rather than whether some discrete subpart of the employee's duties was amenable to being performed while seated” [cite], and (2) that “the variations among class members as to their job as a whole, including the amount of time they spend at the check-out counter compared with other duties, … made class treatment improper because … [it] required individualized inquiries for each class member….”). Yet, despite the plaintiff’s assertion that such grounds were immaterial to the theory of liability she put forward [id., at 7-8], the trial court adopted Rite Aid’s interpretation of the Wage Order and decertified the class. Id., at 8.

Importantly, the Court of Appeal held that this was error because, by basing decertification on a substantive interpretation of the Wage Order, the trial court’s order impermissibly rested upon the “merits” of the plaintiff’s proffered theory rather than on whether the theory itself would be amenable to common proof:

It does not appear that any aspect central to Hall's theory of recovery (i.e. what is Rite Aid's policy, and whether the nature of the work involved in performing check-out functions would reasonably permit the use of seats) would not be amenable to common proof. Indeed, the trial court's decertification order did not make a contrary determination (i.e., those inquiries would not be amenable to common proof), but was instead based on its conclusion that Hall's theory of liability was unmeritorious. Specifically, it concluded, contrary to Hall's postulated theory, that section 14 does not mandate the provision of suitable seats when the nature of a substantial task within an employee's range of duties would reasonably permit the use of seats, but instead mandates the provision of suitable seats only when the nature of an employee's work as a whole would reasonably permit the use of seats. Based on that construction of section 14, the trial court concluded decertification was proper because individual issues as to each class member's "job as a whole" would predominate over common questions. However, under Brinker as construed by Bradley, Benton and Faulkinbury, the trial court's decertification order was based on improper criteria and/or erroneous legal assumptions and must be reversed because it based its ruling on the merits of Hall's theory rather than on whether the theory itself would be amenable to common evidentiary proof.

See Slip Opinion, at 19.

Significantly, the Court rejected Rite Aid's contention that it is appropriate to resolve statutory interpretation issues at the certification stage to prevent a plaintiff from “inventing a class action by proposing an incorrect rule of law”, asserting this process conflicts with Brinker. Id., 20 (“We read Brinker to hold that, at the class certification stage, as long as the plaintiff's posited theory of liability is amenable to resolution on a class-wide basis, the court should certify the action for class treatment even if the plaintiff's theory is ultimately incorrect at its substantive level, because such an approach relieves the defendant of the jeopardy of serial class actions …”). As explained by the Court, Brinker makes clear that the ultimate legal question posed by a theory of liability cannot be resolved in the context of certification, as the propriety of certification does not depend on the court determining such legal matters:

Rite Aid, seizing on Brinker's observation that "[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them" (Brinker, supra, 53 Cal.4th at p. 1025, italics added), argues the court properly evaluated the merits of Hall's legal theory as a predicate to ruling on the decertification motion. However, Brinker repeatedly cautioned that "[s]uch inquiries are closely circumscribed" (id. at p. 1024) and ordinarily should not be addressed as part of the certification evaluation. (Id. at p. 1023 ["resolution of disputes over the merits of a case generally must be postponed until after class certification has been decided [citation] with the court assuming for purposes of the certification motion that any claims have merit"].) We interpret the highlighted language in the passage from Brinker cited by Rite Aid to mean, by negative implication, that to the extent the propriety of certification does not depend on determining threshold legal matters, such determinations should be deferred.n7 Here, the propriety of certification does not depend on whether Hall's interpretation of section 14 is correct because, "assuming for purposes of the certification motion [Hall's] claims have merit," the certification question must focus on whether common questions relevant to proving Hall's theory would predominate over individual issues. Certainly, whether Rite Aid had a policy requiring Cashier/Clerks to stand while working at the register is subject to common proof. Moreover, the other factual question central to Hall's theory of recovery--whether the nature of the work involved in performing check-out functions would reasonably permit the use of seats--appears equally amenable to common proof. Thus, regardless of whether Hall's or Rite Aid's interpretation of section 14's mandate is correct, class certification for Hall's claim would be proper,n8 and resolution of disputes over the merits of Hall's theory of recovery must be deferred until after the class certification has been decided.

Monday, April 28, 2014

On April 24, 2014, the Hon. Josephine L. Staton entered an order denying reconsideration of the Court’s certification of an on-duty meal break class, which the employer claimed was not “ascertainable” from its business records because it had required all employees to record that meal breaks had been taken (on-duty or not). See Dynabursky v. AlliedBarton Sec. Servs. LP, 2014 U.S. Dist. LEXIS 58236 (C.D. Cal. Apr. 24, 2014). Having litigated many on-duty meal break cases, this issue is one that arises from time to time, and the defense always seeks to capitalize on the practice as foreclosing any means of identifying members of the class. The practice itself makes little sense. There is no reason to record or clock out for on-duty meal periods because “the defining characteristic of on-duty meal periods is failing to relieve an employee of duty…” SeeBrinker. v. Superior Court, 53 Cal. 4th 1004, 1039 (2012). This issue was not lost on the Court in this case, which not only held that it failed to provide a basis for defeating certification, but questioned whether the practice violated the employer’s obligation to accurately record hours worked:

Moreover, the fact that Defendant apparently required employees who were not relieved of all duties to record a meal period is not a basis to defeat class certification. Defendant attempts to explain away this record-keeping problem in a footnote in its brief: The ascertainability problem is presented not by officers with off-duty meal breaks failing to record meal break times, but rather by the fact that officers with on-duty meal breaks also record meal break times, making these sign-in sheet records indistinguishable . . . . If the Court is wondering why officers with on-duty meal breaks would record meal break times, this finds explanation in the fact that AlliedBarton's written 'Recording Hours Worked' policy requires officers to record meal break times and does not except officers with on-duty meal breaks.(Mot. at 6 n. 3; see also Reply at 7-8.)

There is a serious question as to whether this system of recordkeeping complies with the law. The applicable Wage Order requires every employer to "keep accurate information with respect to each employee." See California Industrial Welfare Commission Wage Order No. 4-2001, subd. 7. As part of this requirement, an employer must keep "[t]ime records showing when the employee begins and ends each work period." Id. Had Defendant not required those employees who were not relieved of all duties to record a meal period as time off work, the timesheets alone would have provided an accurate basis for determining exactly who is in the class. It is the inaccurate information in Defendant's records that creates the issue upon which Defendant now seizes as a basis for decertification.

However, even if Defendant is not specifically required by law to keep records of which employees take on-duty meal breaks, Defendant's failure to record such information is not a basis to defeat class certification. IWC Wage Order No. 4-2001 and related wage and hour laws are designed to guarantee a 30-minute meal period with limited and narrowly-construed exceptions. See Abdullah v. U.S. Sec. Assocs., 731 F.3d 952, 958-59 (9th Cir. 2013). Decertifying the class simply because Defendant failed to keep accurate records would frustrate the purpose of the Wage Order and related wage and hour laws. Cf. id. at 959; see Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157, 1190, 78 Cal. Rptr. 3d 572 (2008) (shifting burden of proof to defendant to show which class members did not perform work where wages were governed by city's Living Wage Ordinance ("LWO"), even though LWO did not require defendant to keep records distinguishing LWO work from other work); Aguiar v. Cintas Corp. No. 2, 144 Cal. App. 4th 121, 134-35, 50 Cal. Rptr. 3d 135 (2006) ("To the extent questions arise later in the litigation about how to determine which putative class members worked at least 20 hours per month on [LWO contracts] . . . that burden falls on [defendant]. It was [defendant's] business decision to commingle [LWO contracts] with those of other customers and to allow all employees to work on the items . . . ."); see also Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 540 (6th Cir. 2012) (finding "compelling" district court's rationale that "[t]he need to manually review files is not dispositive. If it were, defendants against whom claims of wrongful conduct have been made could escape class-wide review due solely to the size of their businesses or the manner in which their business records were maintained.").

About Me

Matt C. Bailey is a principal at Pollard | Bailey, a Los Angeles based law firm specializing in class action litigation. He has successfully represented clients throughout the country on a wide range of legal issues, including wage and hour and employment matters, product liability, and general consumer and business litigation.